Saratoga County government has developed a reputation for indifference to the quality of services it delivers . We have a Public Defender guilty of DWI and caught on camera trying to get Saratoga Springs police officers to do him a favor and not charge him. We have the case of Michael Prezioso, director of the county Department of Mental Health. You will recall that Prezioso was found guilty of sexual harassment at his previous place of employment by the NYS Department of Mental Hygiene. At his present county post he has been the subject of many complaints about his management of the county facility.
Now we have a new scandal in Saratoga County covered in the article below in the Times Union. I have emailed both Saratoga Springs Supervisors asking what actions they plan to take in response to these revelations.
Link to TU story with pictures
$3 million Saratoga project big loser before closure
Saratoga County leaders, told of shortfalls, deflect blame
By Dartunorro Clark
Published 6:32 pm, Saturday, January 16, 2016
Ballston Spa
A $3 million co-generation plant built by Saratoga County and Siemens Building Technologies lost hundreds of thousands of dollars even though county leaders publicly touted the success of the project, which was designed to provide self-sustaining energy to a county-run nursing home.
A Times Union review of engineering studies and other records for the project — which were never made public — indicate county leaders were informed of the project’s failures even as they publicly blamed energy-market conditions for the losses.
The project began in 2002 when Saratoga County officials were eager to upgrade the utilities at Maplewood Manor, a 277-bed nursing home. The county struck a deal with Siemens Building Technologies to install a cogeneration plant for $3 million to produce heat and electricity, which at the time was touted as a way to save money by cutting the facility’s annual utility bill in half.
Nearly 15 years later, however, the plant has been decommissioned, the equipment sold and the nursing home privatized.
Documents obtained by the Times Union through a Freedom of Information Law request, and interviews with people familiar with the project, show the county’s estimated losses reached $180,000 a year by the time the facility was proposed for decommissioning.
The revelations come as other government projects involving Siemens have come under scrutiny. In October, the Warren County Sheriff’s Department released records from a multi-year criminal investigation that said there was probable cause to consider criminal charges against a Siemens engineer, and that a company representative may have falsified documents related to a cogeneration plant built for that county’s nursing home in 2004.
The sheriff’s report suggested Warren County Administrator Paul Dusek could have faced a misconduct charge for his role in advising, and allegedly misleading, county leaders about his understanding of the deal.
The sheriff’s investigation found Siemens officials may have inflated energy savings. Internal documents obtained by the investigators included a spreadsheet labeled “Contract $” with savings listed at $118,512. But another entry labeled “Actual $” calculated the savings at $68,262, according to the sheriff’s report. An investigator characterized the discrepancy as “intentional deception.” The sheriff’s investigators also found evidence a Siemens supervisor chided an engineer who complained about the alleged fraud and encouraged him to be a “team player.” The employee later quit.
In November, the Times Union reported that Rensselaer County officials took part in a “fact-finding” meeting with members of state Attorney General Eric Schneiderman‘s Taxpayer Protection Bureau on the county’s use of so-called “energy performance contracts,” including $56 million in energy performance projects with Siemens. The attorney general’s office declined to discuss the scope of the inquiry.
In Saratoga County, county officials commissioned a $37,000 study on the cogeneration plant as the end of a 10-year maintenance agreement with Siemens approached in 2012. An engineering firm, New York-based Guth DeConzo, and the New York State Energy Research and Development Authority, which paid half of the cost of the study, were hired to assess the performance of the facility. But, at the insistence of county officials, the scope of the study was limited to one year and did not examine prior years of performance.
Still, the study recommended county officials decommission the plant and re-connect the nursing home to National Grid because it was losing hundreds of thousands of dollars, at least at the time it was proposed for decommissioning, according to documents.
When it was announced, the project was expected to trim Maplewood’s $264,000 annual electricity and gas bill to $131,000 — the cost of the natural gas needed to fuel three natural-gas-fired generators — and the project was expected to pay for itself within 10 years of operation.
When questioned about the cogeneration plant two months ago, Spencer P. Hellwig, the Saratoga County administrator, said the cogeneration plant became “budget neutral” and the county saved hundreds of thousands of dollars over the years. Hellwig also said Medicaid rates and elderly cost-of-care concerns were the reasons to privatize the nursing home, which was sold to Zenith Health Care Group in January 2015 for $14.1 million. He also said the new owners had no use for the plant.
In the study commissioned by the county, the cogeneration project was characterized as economically unsuccessful.
“Cogeneration isn’t necessary to provide heating and cooling to your clients. Cogeneration is an economic proposition,” a Guth DeConzo presentation said. “If cogeneration isn’t (saving money), there (are) limited additional benefits. … It does not appear that continued operation of cogeneration plant is economically feasible, as compared to re-connection to National Grid.”
In an interview last week, Hellwig backpedaled when asked about the documents revealing the money lost by the cogeneration plant. Hellwig said the cogeneration plant became financially unsuccessful due to a number of factors, including market changes and energy costs. But his comments marked a shift from November, when he characterized the plant, overall, as successful but said decommissioning it had to be done prior to privatization. He said at the time of the original agreement in 2002, however, the county felt assured in the savings proposed.
“The expectations that were in place are why the decisions were made,” he said.
Still, county officials, including Hellwig, and the outside engineering company hired by the county to oversee the decommissioning, previously said falling electricity rates were reasons for decommissioning the cogeneration plant, which worked by converting natural gas to electricity and using the “waste heat” generated in the process.
But according to historical data from NYSERDA, natural gas and electricity rates showed annual decreases on average statewide for residential, industrial and commercial customers over the period in question.
For instance, according to NYSERDA, from 2011 to 2012 residential rates decreased from $13.64 to $12.87 per 1,000 cubic feet for natural gas, and 18.26 to 17.62 cents per kilowatt-hours for electricity, respectively.
Commercial rates fell from $9.28 to $7.79 for natural gas and 15.81 to 15.06 cents for electricity. Industrial rates decreased from $8.15 to $6.87 for natural gas and 7.83 to 6.69 cents for electricity.
Also, the county’s study noted the energy capacity that the cogeneration was built for was largely underutilized, which indicated it was inefficient for the nursing home at the onset. And when the 10-year maintenance deal expired in 2012, and the plant was proposed for decommissioning, Siemens was proposing a new $168,000 annual maintenance contract with an “escalation rate” of 4 percent, which the study concluded was “exceptionally high.”
Coupled with lack of savings, sources said, it became advantageous for the county to cut its losses.
“This is largely due to the reality that a large percentage of the equipment is idle for a good portion of the year, and has to still be maintained,” the study said.
Siemens stands by its project and its role in providing upgrades to the county and the cogeneration project.
“Siemens is proud of the work completed at Maplewood Manor, which added further protection from potential power failures at the facility,” said Amanda Naiman, a company spokeswoman.
There is no indication the Saratoga County project with Siemens is being reviewed any agency.
More Information
Timeline
- 2000 Saratoga County sought proposals to upgrade equipment at the 277-bed Maplewood Manor Nursing Home and to improve energy efficiency. The Saratoga County Board of Supervisors recommended that a proposal submitted by Siemens for the construction of a cogeneration project be accepted, according to documents, with the intent to have the project paid for over a 10-year period with no cost to the county. The cost of the project was approximately $3 million.
- 2002 The county home went off the grid and the cogeneration plant was installed.
- 2012 The Saratoga County Board of Supervisors voted to commission a $37,000 study, produced by NYSERDA and outside engineering firm Guth DeConzo, to assess the performance of the cogeneration plant at the end of the 10-year agreement. The study revealed the cogeneration plant was underperforming and losing about $180,000 a year by not being connected to the grid. The committee voted unanimously to pay $20,000 to Guth DeConzo to decommission the cogeneration plant and reconnect the facility to National Grid to provide electric service. The committee also voted to resell the cogeneration equipment, which at the time had an estimated fair market value of $60,000 to $100,000, to recoup some of the investment.
- 2015 The county’s Maplewood Manor Local Development Corp. voted to sell the nursing home to Zenith Health Care Group for $14.1 million. Zenith renamed the Ballston Avenue facility Saratoga Center for Rehabilitation and Skilled Nursing Care. The company’s newly formed entity, Saratoga Center for Care LLC, is licensed to operate 257 beds, down from the former 277.
dclark@timesunion.com • 518-454-5008 • @DartDClark
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